Health Care and Education 4

2Health-Care Location Factors

In looking at the health-care systems among potential locations, survey respondents gave highest priority to data delineating the availability of health care in an area: numbers of publicly and privately run hospitals, the number of doctors per 1,000 people, etc. (see accompanying chart of toprated health-care location factors).

But in addition to the matter of healthcare quantity, there’s also the issue of health-care quality, says Wayne Mills: "We ask about the quality of the healthcare facilities [among potential locations].

We do have a lot of doctors who work for The Travelers, but almost every corporation has a chief medical director they can ask." In something of a surprise, the incidence of AIDS (Acquired Immune Deficiency Syndrome) in an area under consideration for a facility location has not emerged as a top-level health-care concern. (See News Highlights elsewhere in this issue for study results predicting future AIDS-related healthcare costs.) Responding corporate real estate executives only rated the incidence of AIDS as the 10th most important health-care location factor.

Health Care More a Concern with ‘Brainpower’ Locations Paralleling previous Site Selection quality-of-life surveys, nterviewed corporate real estate professionals say the health-care QOL factor is a higher consideration in those facilities fueled by a key core of"brainpower" -- highly skilled, highly mobile professionals. At the same time, the age of the work force in a particular facility is also a factor to be reckoned with in looking at health care, since older workers tend to record a higher percentage of health-care claims.

"How important health care is in the location decision depends on the type of operation," says Wayne Mills. "For example, if you’re looking at a shortterm location using a young work force, it’s not as important. But if

you’ve got a facility that’s going to be staffed by older professionals, it’s more of a big deal." Shervin Freed, vice president for siteselection consultant A.T. Kearney, Inc., handled a corporate relocation which graphically points out the different weight given to QOL issues like health care in siting different types of facilities.

"The company was relocating from Michigan to North Carolina," says Freed, "and it had a dual purpose. We

ended up locating the technical and professional people in Raleigh-Durham, where they had more ready access to amenities like health care. We ended up putting the company’s manufacturing operation in Goldsboro, about an hour’s drive from Raleigh-Durham." As for health care’s role in future location decisions, there’s another development unfolding in Pennsylvania which may make health care both a bigger and much more measurable QOL location factor.

Many states have health-care cost-containment boards, which regularly publish reports on hospital death rates or costs. But the Pennsylvania Health- Care Cost-Containment Council has gone much further. In an unprecedented move, it has compiled statewide comprehensive data on costs, death rates and complication rates by region and by hospital. Moreover, it specifically identifies hospitals by name.

The resulting data is both revelatory and controversial. For example, one hospital in Pittsburgh is reportedly charging almost twice as much to repair or replace a heart valve ($95,185) as another hospital across town. If such specific data become available on a widespread basis around the U.S. and the globe, corporate real estate executives would have access to a very valuable tool to use in fashioning health-care costs comparisons. "People are really waiting to see what happens in Pennsylvania," says Lisa Iezzoni, a Harvard Medical School physician and health-care researcher.

Health Care and Education 3

Avoiding High-Cost Health-Care

Locations Despite the fact that few companies say they are utilizing accurate measurements of health-care costs in comparing locations, 13 percent of responding corporate real estate executives do say their firms are avoiding certain areas in the U.S. because of what they perceive as "excessive health-care costs."

New York City and Chicago were two cities mentioned by respondents as areas their companies tend to avoid because of high health-care costs. States similarly singled out included California, Florida, Massachusetts, New Jersey and New York.

"If you’re looking at a high-cost area," says Wayne Mills, "generally you’re going to find high-cost medical health care." The areas corporate real estate professionals say their companies are "favoring as corporate locations because of...reasonable health-care costs" are heavily weighted toward the Southeast, Southwest and Midwest U.S. States frequently named by respondents as low-cost areas included Alabama, Arizona, Iowa, Kentucky, Mississippi, Nebraska, Tennessee, Texas, South Dakota and Utah. Companies with international operations are also avoiding some countries in their non-U.S. locations. "We generally avoid underdeveloped countries without sufficient health-care facilities to provide a good level of care for our employees," says Wayne Mills. "[Those places] "end up being high-cost healthcare areas because the care is just not available."

On the other hand, some countries outside the U.S. do offer a health-care system that takes less of a bite out of the corporate coffer. "America’s healthcare system is the world’s most expensive to administer," says former Health, Education and Welfare Secretary Joseph Califano. "We spend $100 per person in administrative costs, compared to $21 in Canada." Figures reveal that the $2,600 spent in the U.S. this year for every person in the U.S. is 50 percent more than that spent in Canada. Likewise, U.S. spending on health care is twice that spent per person in Japan and almost triple that in Great Britain.

And those lower health-care costs apparently don’t translate into lower health-care quality: Canada, Japan and Great Britain all have lower infant mortality rates than in the U.S. and enjoy similar longevity.